Chile's central bank held its benchmark overnight lending rate steady at 5.0 percent, as expected, and said future changes to its policy rate would depend on the "implications of domestic and external macroeconomic conditions on the prospects for inflation."
The Central Bank of Chile, which has held rates steady since a 25 basis point cut in January 2012, said the economy was slowing down but this was mainly affecting investments while private consumption remained dynamic and the labor market was tight.
Headline and underlying inflation were close to 1.0 percent and inflation expectations were around the central bank's 2-4 percent target, the central bank added.
In May Chile's consumer prices were unchanged from April for an annual inflation rate of 0.9 percent, down from 1.0 percent, the lowest rate since January 2011 when a new method was introduced, while core inflation was 0.1 percent.
The central bank said global financial conditions had become more restrictive, especially for emerging economies, "in part due to the expectation of an early withdrawal of monetary stimulus in the United States."
In addition, growth prospects for China were lower and recession continues in the euro zone.
The central bank did not make any specific reference to the Chilean peso, but said "the dollar appreciated in the international markets, particularly regarding the currencies of emerging economies."
At its previous meeting on May 16, the central bank had made a specific reference to the depreciation of the peso. But in the two previous statement from April and February, the central bank had mentioned the appreciation of the peso.
In the central bank's background paper to the policy meeting, it noted that the peso had declined by 5.6 percent from the May policy meeting to 504 per U.S. dollar.
Like other emerging markets, Chile's currency has been hit by the prospect of a wind-down of asset purchases by the Federal Reserve, with the global flow of money moving back toward the U.S.
Chile's economy has been slowing in recent months and minutes from the central bank's May meeting in May showed that the policy committee for the first time since June 2012 had considering cutting its lending rate, locally known as TPM.
Chile's Gross Domestic Product was rose 0.5 percent in the first quarter from the fourth, the slowest quarterly growth rate since the third quarter of 2011, for annual growth of 4.1 percent.
The central bank has forecast that the economy will expand between 4.5 and 5.5 percent this year, down from 5.6 percent in 2012.
The central bank's own survey showed that analysts expect a rate cut in July with rates falling to 4.5 percent by December.
Chile keeps rate steady, future moves depend on inflation - Central Bank News
For more details log on to Central Bank of Chile website : http://www.bcentral.cl/eng/index.asp
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Showing posts with label inflationary expectation. Show all posts
Showing posts with label inflationary expectation. Show all posts
Monday, 17 June 2013
Tuesday, 11 June 2013
Russia Central Bank News
Russia's central bank held its policy rate steady but once again cut some of its long-term rates by 25 basis points, saying there "remain risks of further economic slowdown given the weak investment activity and the sluggish recovery in external demand."
Although inflation is still above the Bank of Russia's target and this may affect inflationary expectations if it remains high for "a prolonged period," the central bank said it still forecasts that inflation will return to the target range in the second half of 2013.
At its previous meeting in May, the central bank also noted the risk of economic slowdown and its expectation that inflation would return to its target in the second half of the year.
Russia's central bank last cut its policy rate by 25 basis points in September 2012 to 8.25 percent but has been cutting long-term rates in recent months to bring the cost of obtaining liquidity from the central bank closer to the main rates and strengthen the bank's transmission mechanism.
On the central bank's standing facilities, the REPO rate for up to 12 month loans was cut to 7.25 percent, on loans secured by gold the rate was cut to 7.25 percent for loans from 181-365 days, and on loans secured by non-marketable assets and guarantees, the rate on loans form 181-365 days was cut to 7.50 percent. The rate for 12 months open market operations was cut to 7.25 from 7.50 percent.
Last week Bank of Russia Governor Sergei Ignatyev, who retires later this month, said today's policy decision was going to be very difficult given the rise in inflation while the economy remains weak.
Russia's headline inflation rate rose to 7.4 percent in May from 7.2 percent in April, continuing its rise since hitting a recent low of 3.6 percent in May 2012, and well above the central bank's 5-6 percent range. Core inflation in May was 5.9 percent.
The central bank said the rise was mainly due to higher prices of food and certain regulated prices and tariffs and noted that there were planned increases in the tariffs of certain natural monopolies.
Russia's economy slowed down last year with growth slowing to an estimated 3.4 percent from 4.3 percent in 2011 and the central bank said that indicators point to continued low growth.
"The growth rates of industrial production remain subdued, investment in production capacity continues to decrease," while consumers have been resilient, and labor and credit markets still provide support to domestic demand.
Ignatyev, who has been central bank governor since 2002, will be handing over the reins of the bank to Elvira Nabiullina, aide to President Vladimir Putin, later this month.
Last week he also noted that the continued outflow of capital from Russia has heavily impacted the depreciation of the ruble, which has complicated the central bank's efforts to reduce inflation.
Earlier this year he said some 2.5 percent of national income, or $49 billion, illegally left Russia last year.
Since May, the ruble has lost another 3.5 percent against the U.S. dollar, just as most other emerging market currencies on fears of reduced global liquidity from the U.S. Federal Reserve's tapering of asset purchases. This year the ruble has lost 5.6 percent and was trading around 32.3 to the U.S. dollar today.
For more details log on to Bank of Russia website : http://www.cbr.ru/eng/
Russia holds rate steady, sees risk of economic slowdown - Central Bank News
Although inflation is still above the Bank of Russia's target and this may affect inflationary expectations if it remains high for "a prolonged period," the central bank said it still forecasts that inflation will return to the target range in the second half of 2013.
At its previous meeting in May, the central bank also noted the risk of economic slowdown and its expectation that inflation would return to its target in the second half of the year.
Russia's central bank last cut its policy rate by 25 basis points in September 2012 to 8.25 percent but has been cutting long-term rates in recent months to bring the cost of obtaining liquidity from the central bank closer to the main rates and strengthen the bank's transmission mechanism.
On the central bank's standing facilities, the REPO rate for up to 12 month loans was cut to 7.25 percent, on loans secured by gold the rate was cut to 7.25 percent for loans from 181-365 days, and on loans secured by non-marketable assets and guarantees, the rate on loans form 181-365 days was cut to 7.50 percent. The rate for 12 months open market operations was cut to 7.25 from 7.50 percent.
Last week Bank of Russia Governor Sergei Ignatyev, who retires later this month, said today's policy decision was going to be very difficult given the rise in inflation while the economy remains weak.
Russia's headline inflation rate rose to 7.4 percent in May from 7.2 percent in April, continuing its rise since hitting a recent low of 3.6 percent in May 2012, and well above the central bank's 5-6 percent range. Core inflation in May was 5.9 percent.
The central bank said the rise was mainly due to higher prices of food and certain regulated prices and tariffs and noted that there were planned increases in the tariffs of certain natural monopolies.
Russia's economy slowed down last year with growth slowing to an estimated 3.4 percent from 4.3 percent in 2011 and the central bank said that indicators point to continued low growth.
"The growth rates of industrial production remain subdued, investment in production capacity continues to decrease," while consumers have been resilient, and labor and credit markets still provide support to domestic demand.
Ignatyev, who has been central bank governor since 2002, will be handing over the reins of the bank to Elvira Nabiullina, aide to President Vladimir Putin, later this month.
Last week he also noted that the continued outflow of capital from Russia has heavily impacted the depreciation of the ruble, which has complicated the central bank's efforts to reduce inflation.
Earlier this year he said some 2.5 percent of national income, or $49 billion, illegally left Russia last year.
Since May, the ruble has lost another 3.5 percent against the U.S. dollar, just as most other emerging market currencies on fears of reduced global liquidity from the U.S. Federal Reserve's tapering of asset purchases. This year the ruble has lost 5.6 percent and was trading around 32.3 to the U.S. dollar today.
For more details log on to Bank of Russia website : http://www.cbr.ru/eng/
Russia holds rate steady, sees risk of economic slowdown - Central Bank News
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